Thursday, December 18, 2008

GM delays work on Volt, Cruze engine factory to save cash

General Motors, saving cash as it awaits federal rescue loans, has suspended construction of a Michigan plant scheduled to build fuel-saving engines.

The delay at the $349 million factory in Flint won't affect the late-2010 launch of the Chevrolet Cruze small car and the Chevy Volt plug-in hybrid, spokeswoman Sharon Basel said today.

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CEO Rick Wagoner announced the plant on Sept. 25th and said it would produce two versions of a 1.4-liter four-cylinder engine, one with a turbocharger for the Volt and one without for the Cruze.

The delay reflects GM's heightened efforts to reduce spending as its supplies of cash dwindle. GM is waiting for the White House to approve a bailout that will keep the automaker operating and avoid a Chapter 11 bankruptcy filing.

The postponement will allow GM to halt payments for construction materials, Basel said.

"Steel has been ordered but placed on hold, as have additional orders,'' she said. "This has only to do with the construction of the plant, not the program timing.

She said there is enough leeway in the construction schedule for it to build the engines on time after the temporary hold. She did not say when the work would resume.

She said the Flint factory is being built with a common template used around the world. The plant can be assembled in less than a year, she said.

The 552,000-square-foot facility will be able to build 800 engines a day. Another $21 million is being spent for a vendor tool area.

GM already builds a nonturbocharged version of the engine for its European small cars. Basel said GM has no plans to import those powerplants from Europe if the U.S. project ends up behind schedule.

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